A Time of Great Change for Photovoltaic Inverters
It is clear that photovoltaics is popular and growing. Anyone who follows the news knows that. The more interesting part of the story is that it is a rapidly evolving category due to significant downward price pressure, increasing demand and rapidly evolving technology. And nowhere is this change felt more keenly than in the solar inverter sector.
First the business news, according to IHS Supply: Inverter shipments rose 35 percent in the first three quarters of 2015, with another 20 GW expected to ship during the remainder of the year. The value of the sector will increase 4 percent – to $6.9 billion — during the year compared to 2014. The growth in the value of the market is all the more impressive in light of a drop in prices of 26 percent. Inverter capacity now is priced at $0.12 per watt.
Technavio, in a September report, found that the inverter market, during the period starting last year and continuing through 2019, will have a compound annual growth rate of 14.86 percent in revenue and gain 21.53 percent in annual installed capacity. This suggests that Technavio agrees installation gains will outpace revenue increases. The firm says that inverters represent between 10 percent and 15 percent of the overall cost of a photo voltaic system.
The bulk of the market in the United States is divided between four companies, according to GTM Research: SMA, Solectria, Advanced Energy and Satcom. These four control, according to a graphic accompanying a story on its latest rankings, almost 80 percent of the market. During the first half of 2015, the story says, SMA gained 8.8 percent and Solectria gained 5.5 percent, compared to the first half of last year.
It is a roiling market. “The PV inverter market is quite volatile still due to the dynamics of the solar markets,” wrote Cormac Gilligan, a Senior PV Analyst for Power & Energy at IHS and author of the report in response to emailed questions from Energy Manager Today.” As policies and incentives are removed or decreased, typically shock waves run through the supply chain and add to the price pressure. Also in key markets, new suppliers are continuing to enter, particularly from Asian markets such as China and Japan and these suppliers are adding to the intense price competition.”
While the sales, marketing and accounting staffs are busy working these business angles, the folks in R & D are not on vacation. Indeed, they may be working overtime. The inverter business is evolving as power generation overall is radically changing. It is increasingly driven by the related trends of decentralization and use of renewables. The way in which solar power is managed is deeply impacted by its new and prominent role. Solar, of course, is inherently fickle: The sun only shines sometimes. The bottom line is that the industry is developing a generation of intelligent inverters that are better able to proactive manage this complex and potentially lucrative energy generation technology.
The rise of virtual power plants is analyzed in a story at PV Insider. The bottom line is that that the entire platform is changing. Inverters will assume significant new responsibilities. The future will call for inverters to do more than transform the output of the photovoltaic cells from direct current to alternating current. Now, these elements will play quarterback as well.
A report release last month entitled “Rolling Out Smart Inverters” offered four main conclusions. The findings – that technology is ahead of standards, that inverters can work autonomously, that communications capabilities are a cost/benefit trade offs and that inverter retrofits “can be effectively managed” – all speak to the point that a tremendous amount of research and development is ongoing. The report was produced by the Electric Power Research Institute and the Solar Electric Power Association.
SEPA Research Analyst Ryan Edge, in response to emailed questions from Energy Manager Today, wrote that inverter innovation will continue. “Advanced inverter functionality will be essential to deploy large numbers of distributed solar and battery storage systems. Inverters installed over the past decade or so work very well on a grid with very low penetration of distributed solar. When solar penetration rises to the levels already being seen in Hawaii, California, Arizona and New Jersey, the variability of the solar resource can diminish reliability and stress the grid. Advanced inverters can mitigate some of these issues and increase the amount of distributed resources that can be interconnected. They are a “must have” to install more distributed solar than we currently have in the most advanced areas.
It also seems that standards will catch up and guide vendors are smart inverters proliferate, according to Electric Power Research Institute Tech Lead Nadav Enbar, also in response to emailed questions. “IEEE 1547 standards and grid codes are being developed to help standardize the manner in which smart inverters should operate. These directives are intended to more efficiently guide manufacturers’ product development efforts (rather than allow each to pursue their own proprietary approaches).”
The market for commercial-grade inverters also will grow next year, Cormac wrote. “In utility-scale, IHS forecasts that 1500V PV inverters will be released increasingly for utility-scale installations in 2016 with the United States being the main primary market for this new technology. IHS forecasts that just under 3 GW of 1500V PV inverters will be shipped in 2016 globally.”
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